Green Revolving Funds

A Green Revolving Fund (GRF) is an internal capital pool that is dedicated to funding energy efficiency, renewable energy, and/or sustainability projects that generate cost savings. A portion of those savings are then used to replenish the fund (i.e. revolved) allowing for reinvestment in future projects of similar value. This establishes an ongoing funding vehicle that helps drive energy efficiency and sustainability over time, while generating cost savings and ensuring capital is available for important projects.

The GRF model has gained increasing traction within the higher education sector. Other sectors including healthcare, municipalities, and retail all see the benefits of this innovative funding model and are seeking similar outcomes. This toolkit provides cross-sector guidance on establishing this customizable solution to overcome the common barrier of dedicated funding.

  • TOOLS
    Internal Funding Fact Sheet
    Internal funding refers to the use of an organization’s existing financial resources to pay for energy efficiency projects, rather than seeking external financing.
    This guide is intended to help energy managers and finance professionals at retail companies understand internal financing approaches that can be used for energy projects.
    The Billion Dollar Green Challenge encourages colleges, universities, and other nonprofit institutions to invest a combined total of $1 billion in self‐managed green revolving funds that finance energy efficiency improvement. Helpful tools include an Implementation Guide case studies, white papers, and sample documents, and implementation strategies for campus Green Revolving Funds.
    adidas created the greenENERGY Fund to facilitate investments in energy efficiency and renewable energy projects; the company approved funding for 61 projects, investing $10.8 million and achieving a 29% internal rate of return across the project portfolio.
    The University of Utah implemented an internal Green Revolving Fund to allocate savings from current energy efficiency projects to invest in future projects, saving the university $1.6 million on energy costs since its inception.
    The City of Hillsboro (OR), which plans to reduce municipal facility energy use by 60% by 2030, overcame inconsistent access to capital for efficiency projects by setting up a Sustainability Revolving Fund that has achieved an estimated $24,000 in annual cost savings.
    This concept brief is intended for commercial real estate organizations that are interested in learning about revolving loan funds (RLF) for energy efficiency or renewable energy projects.
    King County created the Fund to Reduce Energy Demand (FRED), a financing tool where the county budget office issues bonds and provides loans to county divisions for equipment upgrades to reduce energy use, and resulting utility bill savings are then used to pay back the bonds, resulting in a neutral or positive cash flow.
    Pittsburgh, PA established a Green Initiatives Trust Fund to set aside funds for energy conservation projects and utilizes the savings to fund future projects.
    Healthy Funding title slide
    At the 2016 Better Buildings Summit, healthcare sustainability experts from the Sustainable Endowments Institute, Cleveland Clinic, and Bon Secours participated in a session on the benefits and practicalities of green revolving funds. 
    Clean Med Presentation opening slide
    Better Buildings Challenge partners Cleveland Clinic and Ascension Health, along with JDM Associates, presented at CleanMed 2017 on best practices in financing sustainability in the healthcare sector. For context, check out the Beat Blog post
    image of electricity wires
    Large organizations are no strangers to the paid-from-savings retrofit model marketed by major ESCos, but increasingly, small organizations are searching for technical and financial support in pursuing these projects.
    Cleveland Clinic established an unprecedented $7.5 million Green Revolving Fund to strengthen its commitment to energy efficiency. The fund stands out as one of the largest annual commitments in any U.S. business sector and as the largest for healthcare.
    This report provides guidance to determine whether green revolving funds are suitable for a particular airport and instructions on how to deploy it. Airports that have the ability and determination to launch a GRF will gain a robust method for advancing their sustainability goals.


Sector:

Commercial

Barrier:

Financing or paying for a project

Tool type:

Toolkit